Bill 124 – Rental Fairness Act, 2017

On April 24, 2017 the province introduced Bill 124, the Rental Fairness Act, 2017. The proposed legislation is one component of the Fair Housing Plan, a 16 point plan intended to help more people find affordable homes, increase supply, protect buyers and renters, and bring stability to the real estate market. For more details on the Fair Housing Plan, visit https://news.ontario.ca/mof/en/2017/04/ontarios-fair-housing-plan.html

When passed, Bill 124 will amend the Residential Tenancies Act, 2006 by implementing a variety of changes which are intended to provide greater “certainty for tenants”. You can read Bill 124 at http://www.ontla.on.ca/bills/bills-files/41_Parliament/Session2/b124ra_e.pdf.

Bill 124 was introduced in the Ontario Legislature on April 24, 2017 and subsequently debated by MPPs

The exemption for the annual rent increase guideline for certain rental units will be removed

The rent control will apply to all private rental units effective April 20, 2017, including previously exempt units created post 1991

The 2017 rent increase guideline of 1.5% will apply to all notices of rent increase given on or after April 20, 2017

A notice of rent increase for an exempt rental unit sent before April 20, 2017, even with a later effective date, will be allowed to proceed if the increase is higher than the guideline

The vacancy de-control will be retained, this means landlords will continue to have the right to establish a new rent when the tenancy ends and the rental unit becomes vacant

Landlord’s Own Use

The landlord or the landlord’s immediate family member will be required to confirm their intention to reside in the unit in writing and reside in the unit for at least one year

The landlord will be required to pay compensation of one month’s rent to the tenant or offer the tenant another acceptable rental unit

If the landlord advertises or re-rents the unit for a higher rent within one year, the landlord will be deemed to have acted in bad faith. The onus will be placed on the landlord at the Landlord and Tenant Board (LTB), to disprove bad faith. If the landlord cannot disprove bad faith, the LTB may order additional compensation be paid to the tenant*

Further clarification of tenant remedies where the landlord evicts on no-fault grounds and fails to pay compensation

*This provision has changed following public hearing and clause by clause review, see below

Standard Lease

A standard lease will be developed by the government which all landlords will be required to use

The standard lease will allow the landlord and tenant to include additional clauses for certain undertakings permitted within the law to reflect their individual agreement

The landlord will be required to provide the tenant with a copy of the lease within 21 days

If the landlord fails to provide the lease within 21 days of a tenant’s written request, the tenant could withhold one month’s rent, until the landlord provides the lease

If a landlord does not provide the standard lease within 30 days after the tenant has withheld the rent, the tenant would no longer be responsible to repay the withheld rent

A tenant who has not received a standard lease could terminate the tenancy on 60 days’ notice at any time

The government has committed to a consultation process with stakeholders on the form and content of the standard lease

The standard lease requirement will not take effect immediately

Clarification of the Pay and Stay rules at the Landlord and Tenant Board

Currently, tenants who receive an eviction order for rent arrears can pay the amount owing and file a motion with the Landlord and Tenant Board to stay the eviction; this often happens without the tenant providing evidence that the necessary amounts were paid in full

A technical amendment to improve the Landlord and Tenant Board process would prevent unfounded ‘stays’ and clarify that only motions which indicate the full amount of rent arrears was paid will be accepted.

Prohibit the collection of money after tenancy is terminated

Protection for tenants will be strengthened to prevent landlords from pursuing former tenants for unauthorized changes such as additional rent, fees or penalties if the tenant vacated according to the landlord’s notice to terminate

An existing offence provision will be adjusted to allow the Rental Housing Enforcement Office (RHEU) to enforce the rules

Clarification of the Second Breach within Six Months provision

Currently, a tenant who has been given a Form N5 notice for damage, interfering with others or overcrowding can void the notice if the issue is corrected within the terms of the notice

If further breaches occur within 6 months, a second notice of termination can be served which cannot be voided by the tenant

Applications based on second breach often fail because it is not always clear whether the first notice became void

An amendment will clarify that the first notice does not need to be void in order for the landlord to give a second, non-voidable notice within six months. Landlords will be required to prove both notices are valid, i.e. prove behaviour

Landlords would no longer be permitted to apply for an Above Guideline Increase (AGI) for extraordinary increases in operating costs due to utility costs. This is intended to mitigate the impact of Carbon Costs on Tenants and was implemented effective April 24, 2017 with the interim amendment of Ontario Regulation 516/06

Additional Changes to Above Guideline Increase (AGI) Rules

Landlords of buildings that have an outstanding work order for elevator repairs would be prohibited from making an AGI; all elevator work orders must be cleared before new AGI applications will be considered

Allow the government to tighten the rules for Above Guideline Increases for capital expenditures by creating a regulation-making authority to specify circumstances where otherwise eligible capital expenditures are not eligible

The government committed to consultation in the development of the regulations related to capital expenditure AGIs

Affidavit Requirements

Certain filings under Residential Tenancies Act (RTA) require they be accompanied by a sworn affidavit

A proposed amendment would allow for localized decision making by the Landlord and Tenant Board (LTB) to determine the circumstances where written statements rather than sworn affidavits filed to support applications and motions would be appropriate

Providing false or misleading information in any material filed with the LTB would continue to be an offence and subject to penalty under the RTA

Combine LTB orders with mediated agreements

If a tenant fails to comply with a conditional order to repay rent arrears or defaults on a mediated agreement related to payment for damage, the landlord files an eviction application based on the failure to comply. Since the LTB cannot combine the original amounts required to be paid with any subsequent arrears in the final eviction order the landlord is often left with two separate orders to enforce

An amendment proposes to allow the LTB to combine orders and mediated agreements in these cases

Following public hearings before the Standing Committee on General Government and a clause by clause review of Bill 124, it was has been amended. Bad faith provisions related to landlord’s own use were revised and strengthened and are now more onerous than originally prescribed, Bill 124 now reads:

Presumption, notice under s. 48

(5) For the purposes of an application under clause (1) (a), it is presumed, unless the contrary is proven on a balance of probabilities, that a landlord gave a notice of termination under section 48 in bad faith, if at any time during the period described in subsection (6) the landlord,

(a) advertises the rental unit for rent; or

(b) enters into a tenancy agreement in respect of the rental unit with someone other than the former tenant;

(c) advertises the rental unit, or the building that contains the rental unit, for sale;

(d) demolishes the rental unit or the building containing the rental unit; or

(e) takes any step to convert the rental unit, or the building containing the rental unit, to use for a purpose other than residential premises.

Bill 124 was ordered for Third Reading on May 18, 2017, pursuant to the Order of the House and passed, carried on division. Bill 124 received Royal Assent on May 30, 2017.

The amendments to the Residential Tenancies Act, 2006 pursuant to Bill 124 will come effective as indicated below:

Item

In Force Date

Regulations Required

Expanding Rent Controls (removing date-based exemptions)

Royal Assent (includes notices of rent increase given on or after April 20, 2017

No

Providing regulation making authority to prescribe circumstances in which a capital expenditure would not be eligible